Chinese tech stocks are a 'bubble in the making'

Chinese technology stocks are now more expensive than the Nasdaq
was at the height of the dot-com bubble.

A
report from Bloomberg News on Tuesday noted that the
price-to-earnings ratio of Chinese internet stocks is now at 220
times earnings, way above the 156 earnings multiple the Nasdaq
garnered at the height of the tech bubble in March 2000.

Bloomberg noted that while valuations for Chinese tech stocks is
sky high, this sector represents about 13% of the overall stock
market in China, less than the 31% that tech stocks accounted for
in the US during the dot-com bubble.

This news also follows
a report last week that showed 6% of China's newest stock
market investors can't read.

"That doesn't mean it can't be sustained," Bloomberg's Tom Orlik
wrote in a report last week. "China has a large population with a
substantial volume of savings and limited alternative investment
options. It does mean that the trajectory of China's
markets will be unpredictable, and prone to sudden reversals as
sentiment shifts."